Zingales to Republicans: Go Jeffersonian

The Republican Party has to move from a pro-business strategy that defends the interests of existing companies to a pro- market strategy that fosters open competition and freedom of entry.

...A pro-market party will fight tirelessly against letting firms become so big that they cannot be allowed to fail, since such firms may take risks that ordinary companies would never dream of.

In response, Mark Thoma argues in defense of the Democratic Party as the Jeffersonian populist party. He claims that Zingales' ideas, including school vouchers, are Democratic Party ideas.

The general idea that some kids are disadvantaged by the education they receive has been a mainstay within the Democratic party for a long time, and quite a few Democrats endorse vouchers as part of the solution (even breaking up teacher's unions in some cases).

I think that these two quotes illustrate how an economist becomes partisan. Basically, you take an unrealistically optimistic view of the policies and propensities of your favorite party. I mean, Mark Thoma is telling us about pro-voucher Democrats, when the reality is that the Democrats killed the DC school voucher program. There was even a story the other day about Obama's Attorney General telling a DC Councilman not to run an ad supporting vouchers.

Thoma is fantasazing about a non-corporatist Democratic Party, when today's Washington Post has a lead editorial on what I personally think is the worst Obamination, the Chu-mobile.

We share the administration's fervent wish for a cleaner, greener vehicle fleet. All parties to the deal assure us that the site's proximity to transportation routes and other advantages, not politics, led Fisker to locate there. Just one question: If the Volt isn't commercially viable, why is Fisker's car? The company has not even described the vehicle publicly, except to say it's "family-oriented" and will cost about the same as the Volt.

Meanwhile, Zingales is guilty of believing in fantasy Republicans. I agree that Republicans should favor competitive markets, and that business leaders often oppose them. And I share his preference for breaking up big banks rather than relying on the strategy that I call "too regulated to fail."

Now would be a great time to revive the Jeffersonian tradition of hostility toward concentrated power in finance in government. It would be a great time to take on what I call Chauffered America.

But, then, I look at the leading Republican candidates for President. Huckabee. Palin. Romney. If there is any resemblance to Thomas Jefferson, I can't see it.

Comments and Sharing

Ummm... Kevin Chavous, the guy that Eric Holder reprimanded (highly inappropriate in my mind), the supporter of the vouchers. He's a Democrat.

Which is really the whole point. Not all Democrats support vouchers, obviously. But that doesn't mean Republicans own it. And there are a lot of Jefferson-inclined Americans that feel at home in the Democratic Party and repulsed by the Republican Party, and confused by the people who think the Jeffersonian solution is to generate a bunch of Ron Paul clones.

But I agree with your concluding sentiment - it's pretty thin bench of good statesmen no matter which party you look to.

The key difference is one of political timing. While difficult, it's at least somewhat conceivable at this moment in history to somewhat reform the Republican party into something more Jeffersonian.

The weakness of its current leaders makes them ripe for being knocked off and replaced with someone better.

The Democrats are in power, however, and are obviously not going to initiate a civil war amongst themselves while they're ascendant.

The big question is if new leaders can emerge into the GOP or whether it falls apart and they form a third party. I'd bet on the former since the latter would result in a fairly obvious vote split and Democratic win.

The question is whether the failed leadership of the Replubicans has a bigger interest in, essentially, graft (in which case they cling to a diminishing and irrelevant party from the big picture) or whether they're willing to be smaller fish in a bigger pond that might actually win something.

And of course, it's possible that no new leaders emerge and we're all screwed.

Zingales does not claim that Republicans are the pro-market party, although he states that they have been pro-market in the past. He also recognizes that Republicans betrayed competitive ideals by growing government. His main argument is that Republicans should become the pro-market party.

Democrats typically are more in favor of subsidies than Repubs (green subsidies, farm subsidies, protectionism). Some Dems may cloak their actions in the language of competition, but their polices are anti-competition (labyrinthine regulatory regimes that create barriers to entry, government agencies that distribute funds, unions, antitrust laws used most often by competitors to quell competition). Just because Dems have called for more regulation of financial firms does not mean that they have favored regulations that support competition or that will be beneficial (CFPA anyone).

Zingales talks about what the Repubs should be and is cognizant of their unfaithful past. Thoma's article does not pass the laugh test. Zingales is not deluded like Thoma. At least not based on those two articles.

Once the Republicans came into power, the intellectuals stopped thinking in broad ideas and started coming up with policy prescriptions. The crime on the right isn't that Palin isn't mensa, it's that the intellectuals have even fewer ideas.

On education, for instance, "the right" ought to call for the separation of school and state and put the entire education system on trial. Make vouchers the fall back position of left-wing radicals.

Charles Murray's welfare-system replacement idea is about the only radical idea of heard in a long while, and it's a fighting withdrawal against the welfare state.

"Ummm... Kevin Chavous, the guy that Eric Holder reprimanded (highly inappropriate in my mind), the supporter of the vouchers. He's a Democrat."

Yes. He's not denying that there are no such Democrats. He's just denying that they have any power or will have power. Compare to how there are pro-market Republicans, but the balance of power is held by corporatists.

"But, then, I look at the leading Republican candidates for President. Huckabee. Palin. Romney. If there is any resemblance to Thomas Jefferson, I can't see it."

Well, Huckabee and Palin use populist methods of campaigning. I would see more resemblances to Jackson than Jefferson, though.

Both parties support farm subsidies. Both parties supported TARP. Neither party gives meaningful support to school choice, although the Democrats are more hostile to it. Still, it appears to me that our choice is between a party that will propose a goverment solution to ANY perceived problem versus a party that only reluctantly goes along with government solutions. Or between a party that will always point to taxes as a solution versus a party that thinks that tax cuts are always the solution. One party supports anything the unions propose, but both parties seem to support corporate welfare.
I have problems with both parties, but the rhetoric of the Democrats always convinces me to vote for the Republican. That's what bothered me about Huckabee and McCain. They both seemed too comfortable with anti-market rhetoric.

Thoma's takedown of Zingales flows from a fantasy view of his party and it ignores its heavy corporatist bent. Back room deals with pharma over pseudo price restraint? Thoma ignores it. Unwillingness by the party's most liberal power broker (Barney Frank) to even consider a return to Glass Steagal? Thoma apparently thinks its irrelevant. The party's gung-ho attitude towards a housing tax credit expansion authored by a GOP ex-realtor senator? Again, this doesn't appear on Thoma's radar screen. Modify rather than cram-down mortgages (which would really hurt banks)? Again, ignored.

I could go on and on. Factions of the left and right -- strip mall America -- are mad as hell over the bank bailout and a stimulus that has done little to help them. They both lack leaders, as most Congressmen are corporatist and, besides Palin, there's no explicitly populist (or potentially populist) Governor that I can think of.

FD and Teddy Roosevelt were each populists in their own right, in their own parties. A pair of these will emerge at some point. The question is when.

First the Republican base is not sophisticated enough because they opposed the bailouts. Now they are not Jeffersonian enough because they are pro-corporation rather than pro-market competition. Which is it?

Labels labels labels. Theodore Roosevelt had strong support for the unions during his presidency, so I guess that makes the Republican party pro-labor (as the unions would put it). A few Democrats here and there support school vouchers, so that makes the Democrats the party of school choice all of a sudden! And recently, Hugo Chavez labeled socialism as the "Kingdom of God on Earth". Hear that?! We can now label socialists as religious extremists because one of their ilk tied the two together.

Do you want to say that FDR was not a corporatist? Or his namesake Teddy?

Give me a break.

Had it not been for the Supreme Court, FDR would have completed economic fascism (the highest form of corporatism) in America.

And T. Roosevelt who was the most vicious anti-trust enforcers and oversaw the creation of the of the Fed. Anti-trust is one of the worst forms of corporatism as despite its rhetoric it actually serves the interests of established companies. Fed is the worst form of bank cartel.

I think that these two quotes illustrate how an economist becomes partisan.

Is it uncharitable to accuse Christine Romer of the same? My understanding of her research is that it casts strong doubt on the effectiveness of fiscal stimulus, even in the Great Depression. And yet she seems to spend most of her time touting fiscal stimulus.

On Arnold's last part- Jefferson would be appalled at the scope and power of governments everywhere in the US, simply appalled. Indeed, people like he and Madison would recognize instantly the source of the problems we labor under today- they warned us in their writings about it, and they tried proaction to prevent it. We simply failed to heed their wisdom.

I agree I think. I would like to see the Republican or the Democratic party or the rise of some other party that embraced a straight up free market.

The issue of tactics seems to be the problem. Personally, I think the best hope is a series of ruthless purges of the Republicans during the primaries. Ignore their likelihood of election or being effective. If they don't toe a straight up free-market line, they must go. If they don't repudiate any previous statist actions they supported, they must go. No acceptions.

I think the result would be a period of wandering in the wilderness for the Republicans while they steadily moved towards the free market.

Of course, this approach runs the risk of allowing the Democrats to run amock for 4 or 8 years. I don't see any choice. Better I think to let the Socialists have their way in the hopes that the predictable results will be blamed by the public on well the socialists, then the Bush strategy of implementing national socialism in the name of capitalism and having the predictable results blamed on capitalism.

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